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"Danger, Danger Will Robinson"
I feel like the robot in the television show, "Lost In Space". Investor sentiment remains bullish and trends in gold, crude oil, and yields on the 10 year Treasury bond are collectively becoming extreme as well. This combination has me thinking: "Danger, Danger Will Robinson".
Yesterday, I presented our combination sentiment indicator and our indicator that measures the trends in gold, crude oil, and yields on 10 year Treasury bonds. As stand alone indicators, each of these would suggest caution on equities. Together they work synergistically. For example, with regards to our combination indicator constructed from the trends in gold, crude oil, and 10 year Treasury yields, the data was reasonably compelling to suggest that when these trends are strong (as they are now) that it is a headwind for equities. The data is more compelling when we consider both investor sentiment towards equities and trends in gold, crude oil, and yields on 10 year Treasury bonds.
Figure 1 is a weekly chart of the S&P500. The red dots over the price bars are those times when both sentiment was bullish and our combination indicator was in the extreme zone suggesting strong trends in gold, crude oil, and yields on the 10 year Treasury bonds. The chart goes back to 2004, which is the time our sentiment indicator starts.
Figure 1. S&P500/ weekly
******
This data is more suggestive of a market top than a lift off to a new bull run. The only thing that would change my mind regarding this is if some of the shorter term measures of sentiment (i.e., like the Rydex asset data) were persistently bearish (i.e., a bullish signal). As a representative sample of market participants, these short term traders were betting against the market mid-July, 2009 to mid - August, 2009 when the market went on a moonshot and the "this time is different" scenario unfolded. No doubt short covering had something to do with this.
Lastly, I believe the market is setting up for a reversal. The other day I made "The Bearish Case For Equities", and I used the Ultra Short S&P500 ProShares (symbol: SDS) as an example. I explained how a weekly close below the key pivot at 33.57 would be a good sign of a continuation move for equities. In other words, if SDS closes below 33.57 on a weekly, then expect higher equity prices. This is a true statement as key pivots act as support and resistance and we are below support here on SDS. The key pivot at 33.57 is now resistance.
However, this is also the time where there are reversals or "fake outs", and with sentiment modestly bullish and with trends in crude oil, gold, and yields on the 10 year Treasury strong, I believe there is a reasonable chance that the market is setting itself up for such a scenario. We cannot have a reversal without a close below the key pivot. So today's action is the first step in the process. If equity prices do continue higher, then it is my expectation that it will be at the grinding pace we have seen over the past 4 months.
I know this is somewhat controversial, but it is consistent with the data and the price action. The price action is good despite the lack of volume; all the other data suggests headwinds. Putting it together, there is a higher than likely chance of reversal.
Lastly, to keep it light, I have included a picture of the robot from "Lost In Space". Did you know that his name was B-9? See figure 2.
Figure 2. Robot
Lastly, get a daily dose of market sentiment. Subscribe to our Premium Content! Improve your market timing for 2$/ week or 40 cents/ day.
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"This recovery has been nothing but a complete and utter illusion, and within the next two years, the illusion will likely come to a complete collapse.
The governments gave the banks a blank check, charged it to the public, and now it’s time to pay; through drastic tax increases, social spending cuts, privatization of state industries and services, dismantling of any protective tariffs and trade regulations, and raising interest rates. The effect that this will have is to rapidly accelerate, both in the speed and volume, the unemployment rate, globally. The stock market would crash to record lows, where governments would be forced to freeze them altogether.
When the crisis is over, the middle classes of the western world will have been liquidated of their economic, political and social status. The global economy will have gone through the greatest consolidation of industry and banking in world history leading to a system in which only a few corporations and banks control the global economy and its resources; governments will have lost that right. The people of the western world will be treated by the financial oligarchs as they have treated the ‘global South’ and in particular, Africa; they will remove our social structures and foundations so that we become entirely subservient to their dominance over the economic and political structures of our society.
This is where we stand today, and is the road on which we travel.
The western world has been plundered into poverty, a process long underway, but with the unfolding of the crisis, will be rapidly accelerated. As our societies collapse in on themselves, the governments will protect the banks and multinationals. When the people go out into the streets, as they invariably do and will, the government will not come to their aid, but will come with police and military forces to crush the protests and oppress the people. The social foundations will collapse with the economy, and the state will clamp down to prevent the people from constructing a new one.
The road to recovery is far from here. When the crisis has come to an end, the world we know will have changed dramatically. No one ever grows up in the world they were born into; everything is always changing. Now is no exception. The only difference is, that we are about to go through the most rapid changes the world has seen thus far."
http://www.globalresearch.ca/index.php?context=va&aid=17736
Neofuedalism is the name of the game. Sigh.
Weekly charts look like they've tested the downtrend from 2007 and are moving back up. Too late to turn bullish and too early to turn bearish. If you bought properly, it would be a hold and waiting for bearish action to close out positions.
Well the system has collapsed; so TA and FA is so hard to really do, but that chart is well noted, thank you.
What ever happens in Iceland is most certainly guaranteed to rocket the "worst of the worst" European banks on Monday:
AIB
IRE
NBG
UBS
DB
HBC, etc...
ya thunk Robo ? Nada's gonna happen. One small leg down and then back to its merry ways for this market. I am a Perma Bear and read Zerohedge to get frustrated about how everything does not seem to be working like it should but dailyjobcuts.com restores my sanity though - Nothings working indeed even though O, B & G are trying SO HARD !!
The equities rally should continue for a bit longer before the main downtrend resumes.
Weekly charts are bearish/neutral.
http://www.zerohedge.com/forum/market-outlook-0
This market is a traders dream.
Stuck in a range - limited on the upside by uncertainty and protected on the downside by the PPT.
Trade it and take profits, don't be greedy up or down.
I knew Robot's name was B-9. Nobody knows that, so I'm surprised to see it mentioned. It comes in the episode where the Jupiter II is on a planet run by robots. Robot is hip and gets in good with the head robot there, who has a feminine voice (queen robot?). They escape, of course (no thanks to Dr. Smith).
There is massive resistence at 1150 SPX. So a big 2003 type rally is unlikely. If Treasury can issue $220 billion every two weeks compounded at 10% per year without any increases in interest rates, then the market will grind at these levels. The next big move will likely start with 1st quarter earnings releases.
ttt, your analysis shows that the inputs into your sentiment system are unreliable in a manipulated market. May I suggest to you, that you switch to another method although it may be painful to do so. Trade the chart, not the fundamentals or sentiment & you may see improved results no matter how bizarre the news/noise of the day. Good luck & good trading to you!
Keep in mind that the Robot says that every episode, Will always got saved, and no one ever died.
That about sums up the last year of the markets
Early results: Iceland voters reject debt deal
By GUDJON HELGASON and SYLVIA HUI (AP) – 11 minutes ago
REYKJAVIK, Iceland — Still smarting from the crippling aftermath of the global financial crisis, Iceland's voters on Saturday resoundingly rejected a $5.3 billion plan to pay off Britain and the Netherlands for debts spawned by the collapse of an Icelandic Internet bank, according to initial results.
Results returned from around 83,500 ballots — or more than 40 percent of the total ballots expected — counted so far showed that 93 percent of voters said "no" in the referendum, compared to just 1.5 percent who said "yes." Final results are expected overnight.
The referendum results are indicative of how angry many Icelanders are at bankers and politicians as the tiny island nation struggles to recover from a deep recession. The global financial crisis wreaked political and economic havoc on Iceland, as its banks collapsed within the space of a week in October 2008 during the credit crunch and its currency, the krona, plummeted. The Icelandic government was the first to fall as a result of the meltdown.
http://www.google.com/hostednews/ap/article/ALeqM5iTTt4q_nCPGeeZVnPsWYFG...
Heh, a selloff???
Doesn't look like it.
Just look at these insane moves:
Sotheby's busting out going totally vertical:
Macy's has gone up like 20 days in a row non-stop:
Junk retailers like Ann Taylor making fresh, new 52-week highs:
Cruise lines making new 52-week highs...
And this is happening in the midst of the worst recession in recent history???
Here, I'll let Rasputin finish up....
...................................
Happy anniversary (sort of), bears.
Rasputin - Sat, Mar 6, 2010 - 08:49 AM
For, it was one and one-half years ago (the weekend of September 6th-7th, 2008) that the simultaneous implosion of:
1. Fannie
2. Freddie
3. the FHLBs (the near-trillion fiatsco entity which few people discuss)
4. Lehman
5. AIG
6. B of A/Merrill
7. Citi
8. JPM
9. Goldman
10. Morgan Stanley (these last two having to be converted from investment banks to "commercial banks" in a 24-hour period)
...and:
11. Literally every single other big bank, pension fund, money market fund and other gamblet, worldwide
...impelled the governments and central banks to respond with the
most massive, coordinated, unprecedented campaign of
reflation/monetization/stimulation/nationalization in the history of
mankind.
And guess what?: It worked.
Here we are, a scant eighteen months later and stock markets are
re-skying, McMansion prices stopped collapsing, sheeple are back out
shopping, PMs are flat or below their highs, the U.S. nightcrawler is
rising, corporations are borrowing and issuing new stock like crazy,
job losses are slowing, there have been ZERO bank runs, general panic,
mass disruptions, or other dire consequences predicted by a
then-hysterical (but now chastened, wizend and calm) Rasputin.
(Ras Conclusion): We're NOT scroomed. We're saved. Furthermore, in
addition to the above-listed actions on the part of TPTB, there has
been ZERO meaningful reform of yhe system, ZERO indictments and
convictions of the criminals in charge, re-appointment of the
regulators responsible for the collapse, and--most
importantly--"business as usual" in all the former gambling casinos,
especially the derivatives parlor.
LOL, and people wonder why I have given up
screeching "Scroomage!". Even the most dense, most stubborn, Rasputins
know when they have been defeated.
Now, someone needs to tell Mish, Denninger, the Comstock boys,
Harry Dent, McHugh, Jim Willie, "General Jim", Prechter, Tim Wood, and
all other perma-gloomers, GHSers, and deflationists that the game is
over, they lost and it's time to leave the field.
classic zig zag on M
Scroomage (further) delayed is not Scroomage avoided.
Deflationists and short are going to get their heads handed to them in the next 1-2 years. The markets are all telling us one thing: QE 2.0. Don't fight the Fed. Jim Sinclair right again; Gold to $1650 then to $5000.
Dont be so despondent Robo - check out www.dailyjobcuts.com. What you see is almost surreal (and sobering for a Bear) !! The country is going to HELL on a ONE WAY TICKET !!
"We're NOT scroomed. We're saved."
Based upon what fundamentals? Are any of the companies shown in these charts profitable? Nothing since 2007 has fundamentally changed. We've simply seen the first leg down and 1932 is right around the corner (again). As is so often the case, some traders' time horizons are a little too short.
"And guess what?: It worked."
Usually, when a definitive statement such as this is written, there is two more sentences to follow "and they all lived happily ever after. The end"
RA RA Rasputin giving up??
THIS is an ominous bearish signal.
I am having flashbacks to my prom when I realized I took the dumbest girl possible (referring to the Market, not Robo). The market has no clue what inflation is. "Brittney IS a good singer." At least the only downside was a couple of lame hours. Here we are talking about the most important facet of life-money (not my choice, I hate the doelarr). Macys blowing out the market....BAHAHAHA!
Rasputin,
You may be right, but from where I sit, most of the sources of instability back in 2007 and 2008 are still around, and have been joined by some even more mecurial siblings (sovereign debt funding concerns). I think that we are in a worse position to address future system shocks than we were in 2008. Very much hope that I am wrong on that one.
When the initial failures occurred, there was a lot of pussy footing around on the way to bust. When the second round hit, it proceeded at a much faster clip. The market learning curve was over. If things break again, I fear that the markets' reactions will make the action in the fall of 2008 and early 2009 look like the kiddie coaster.
And what about the unemployed? We wont just get used to it.
Robottrader fail. Sounds more like leo.
Raz finally capitulated?
Game's over.
SPY had trouble with the 115 resistance area in January. It's knocking on the door again. Seems like if it pushes through for a few days then we're going higher.
If it happens, gold will lead the charge.
I think Raz has bought right into the "extend and pretend" being carried out worldwide right now.
A fact's a fact, we have levered up even more and changed nothing just to get to where we are in 2010. More highly leveraged, same system, same crooks, same players. Not looking good going forward.......
Alas poor Rasputin, we knew him well....
And he was wrong the last time, too.
The game isn't at all over. Don't confuse a dead cat bounce for a bubble having finished deflating, when it hasn't.
No bubble has deflated straight down. Bad debt is still bad debt, even if it is being hidden from sight until the fraud comes to the light of day.
Math does not care what Bernanke does. Inflation ends in deflation. The illusion of working is not the same as working. Deflation ended in Japan, only to return again and again. The math is not fooled. The fools are the ones who think they can override the math. 1 + 1 still = 2.
The smartest guys in the room, Nobel lauriates at LTCM, thought they had a perpetual money making machine. Then math intervened to teach them a lesson. Exponential losses suddenly piled up.
The BIG Lie now, is that Japan didn't do it big enough, or FDR didn't do it big enough. That lie works until the math teaches a lesson.
Was the housing bubble not big enough? Anyone who could fog a mirror was allowed to buy a house. So why did the housing market crash? Math. There is no "they didn't do it big enough." 100% of bubbles burst and deflate. 100% of booms end in a bust. 100% of manias end badly.
No, it didn't work. Gold had a dead cat bounce after it's bubble burst in 1980. Afterward it fell further still. It ain't over till its over.
All this "massive coordinated campaign of reflation/monetization" by central bankers does not fool math. Deflation is the final phase of the inflation/deflation cycle. A stock market crash was replaced by a housing market crash. What does a "massive coordinated campaign of reflation" crash look like?
Mish is still right.
Math has been hiding these last 18 months, something fierce.. The 50 day is met with ferocious upticks in the M1. There is no market. The PPT has become a gollem .... The souless monster made of mud that protects the banksters.
You'll never see a correction or crash again.
Denninger, is that you?
Early results: Iceland voters reject debt deal
By GUDJON HELGASON and SYLVIA HUI (AP) – 11 minutes ago
REYKJAVIK, Iceland — Still smarting from the crippling aftermath of the global financial crisis, Iceland's voters on Saturday resoundingly rejected a $5.3 billion plan to pay off Britain and the Netherlands for debts spawned by the collapse of an Icelandic Internet bank, according to initial results.
Results returned from around 83,500 ballots — or more than 40 percent of the total ballots expected — counted so far showed that 93 percent of voters said "no" in the referendum, compared to just 1.5 percent who said "yes." Final results are expected overnight.
The referendum results are indicative of how angry many Icelanders are at bankers and politicians as the tiny island nation struggles to recover from a deep recession. The global financial crisis wreaked political and economic havoc on Iceland, as its banks collapsed within the space of a week in October 2008 during the credit crunch and its currency, the krona, plummeted. The Icelandic government was the first to fall as a result of the meltdown.
http://www.google.com/hostednews/ap/article/ALeqM5iTTt4q_nCPGeeZVnPsWYFG...
Thanks; another fly in the ointment...
I got to meet Bob May and Dick Tufeld, the man inside and the other, the voice of The Robot.
It seems like we are all a Reluctant Stowaway on the rally from march 2009. Some day, the market will crash land on a Ghost Planet. The question seems to be, when will the market run out of deutronium?
I am seeing absurd behavoiur in the Russell 2000. These small cap stocks are, for the most part, garbage unless we have a strong environment of growth. We don't.
This P.O.S. has gone on a complete moonshot the past 3wks, and is up almost 100% from its March 2009 lows. The angle at which it has appreciated over this 3wk period is obscene, its beta to the DJIA and SPX is almost 2:1.
This is the shorting opportunity of a lifetime in my opinion.
SteveNYC: "I am seeing absurd behavoiur in the Russell 2000 ........ shorting opportunity of a lifetime in my opinion."
Hubba-hubba! Such a nice thing to see on a Saturday eve. I'm a rank beginner but I think you're onto something. Nothing quite like a good looking chance to maybe beat them at their own game, and in fact the more I think about it the more I like it. Won't bet the ranch, maybe just the wife and the chicken coop...for now.
Been a zeroheadger about a month. I'm finally starting to get it, the Fight Club thing and all. It's bareknuckle finance, you're bound to get bloody and it doesn't hurt if you're a little crazy. It worries me sometimes how much I enjoy it. Then the grandson calls me back to earth.
Welcome friend. Likewise, I am an amateur when it comes to trading, yet like to spot medium term trends and play them. I am risk-averse, and will never bet too much or hold onto a losing position. Live to fight another day. Frankly, I don't care to do too much more than keep some cash in the safe, some o/s, and a very, very thin layer in the bank ('cause I hate US banks and at 0% interest, my ROI is better in the safe!).
Keeping my cash away from banks/money managers is doing my part. Starve the beast.
And don't forget to add a few more allowances to your W-4... Your HR department will give you a new form if you need one. Patriots, lets do our part...!
Rock on Buddy --Starve the BEAST that is America's Banking Cartel...
If you would have told me 2 years ago that we would see the fraud layered upon fraud, Enron style accounting approved at the highest levels, I would have told you you were CRAZY..
And here we are. It is surreal.
With great Beta comes great responsibility.
With great beta often comes much drinking to steel one's nerves.
Great comments. What are your thoughts on this index? I base my view on:
- Low/no economic growth (actually feel there will be further contraction) in the US
- No bailouts for the small guys
- "Too bigs" are getting bigger, should devour the smaller competitors
- Barely a dividend in sight in the index
- Extreme PE's
- Huge up moves from some absolute pigs in the index. Could reverse very fast
Would love to get your take(s).......
what are your thoughts on this index?
Steve.... hot money from Fed looking for a place to play. somebody figured out that the small caps didn't jump enough on the January 2 start of the new trading year like "they always do" and decided to get that sector going. sector in, sector out. too much hot money money blowing up the echo bubble. it would be too good to be true if the RUT crashed so the high remained 666....
good pts, on a macro level, small to med businesses are as a group are up against poor economy and advantages going to big business...I think the SCOTUS Citizen United decision will hurt non-big businesses more than our democracy, as I our democracy was already thrashed but businesses could still compete...now, whoever was the big dog at the moment of SCOTUS decision will likely be able to consolidate its power thru govt influence...
Nice perspective and unique from my readings. thank you very much.
I used to love that show as a kid.......nice memory.
This is a test to see how much i have learned from Zerohedge.
Many , 80% of mondays turn out positive.
This monday wont , because they want us to buy treasuries so the market has to fall and scare you into buying debt, which some will.
But the auction will still fail, but it will be saved by the Household(unknown) buyer so it wont appear as failed.
Who do they think they are fooling. Why? After all isnt China all in on this. Do they have a deal with China like the greeks did?
Tune in tommorrow for another episode of " Impossible Planet"
greeks have deal with china? pray tell sire
"This does not compute" was also a famous utterance from the robot. I'm not referring to the article but rather the rally over the past 6 months. But once you've crossed the Rubicon, there is no more "normal" to measure the reality against. All you have left is the smell test and this rally is stinking up a storm.
It's great to see that robot again. I really missed that 'bot.